June 6, 2018
Iran: What Next?
By Peter Westmacott
Trump had already signaled in January that he did not like the deal and regarded Iran as the world’s leading state sponsor of terror. He knew that ditching it and reapplying US sanctions would go down well with his wealthy friends in Saudi Arabia and the United Arab Emirates, with Israel, with many of his donors, and with his evangelical base. And in case anyone was in any doubt, he appointed John Bolton, a renowned Iran hawk, as his national security advisor shortly before announcing his decision.
The European signatories of the agreement had, of course, lobbied hard for its preservation on the grounds that it was the least-bad way of ensuring that Iran did not acquire nuclear weapons. They also objected to Trump’s critique that the JCPOA did not deal with Iran’s support for Shia militias in third countries, efforts to destabilize the region, and ballistic missile tests—none of which had ever been on the agenda for the JCPOA negotiators. Still, the United States’ European allies worked hard during the weeks leading up to Trump’s announcement to try and address some of his concerns about the deal’s “terrible flaws” and Iran’s continuing provocation in the region, in the hope that he would decide to build on rather than destroy the agreement.
In the aftermath of Trump’s decision, there was of course widespread disappointment and criticism of his logic. Amongst other questions, people asked what better plan Trump had for constraining Iran’s nuclear program. When on May 21 US Secretary of State Mike Pompeo produced a long list of demands that Iran would have to satisfy if there was ever to be a new nuclear deal, it was immediately clear that neither he nor the president had any intention of concluding a new agreement. Even as an opening bid, US demands for Iran to take a series of measures which no one is asking of any other country in the region ensured that there was no chance of engagement on the Iranian side.
Part of the US strategy is to ratchet up sanctions on Iran in the hope that the impact on the economy will force policy changes or, failing that, regime change. Critics argue that the whole approach is flawed because there will never again be the degree of international support for sanctions which brought the regime to the negotiating table—but were never sufficient to stop Iran’s enrichment program. Russia is clear that it will never again agree to sanctions proposed by the United States at the Security Council—partly because Russian President Vladimir Putin believes he was deceived by the United States and its allies when the Security Council agreed to military action against Libya in March 2011. China, India, and Turkey are also expected to continue trading with Iran.
Which leaves the Europeans. Sympathetic as they may be to Trump’s complaints about Iranian behavior, European governments are already unhappy at the way US sanctions are preventing Iran obtaining many of the economic benefits to which it is entitled under the JCPOA. They certainly do not wish to be bullied into accepting the extraterritorial application of additional sanctions with which they do not agree and on which they were never consulted. An early test will be their willingness to resist US pressure to deny Iran access to Swift, the Belgium-based interbank financial network to which Iran was reconnected in early 2016 during the JCPOA negotiations.
There is no legal obligation on other countries to go along with unilateral US sanctions. In the 1980s, then British Prime Minister Margaret Thatcher refused to accept the extraterritoriality of US law and forbade British firms from going along with US sanctions against Russia when Washington tried to prevent them supplying equipment for the trans-Siberian gas pipeline. Some years later, the EU considered taking action against the United States at the World Trade Organization (WTO) in response to the 1995 Iran-Libya Sanctions Act.
Draft legislation of this kind could be reactivated, though it is harder to apply when the sanctions address the global financial role of the dollar rather than just trade in goods. More important, numerous foreign banks have recent experience of being forced to pay huge fines to US regulators because of the threat of suspension of their license to trade in dollars, without the legality of the US action ever being tested in court. Washington is expecting those banks and their clients not to risk it again now that tougher sanctions are about to be applied to Iran.
The recent decisions of the French oil major Total and Airbus not to implement contracts with Iran, and the 15 percent fall in the value of the Iranian rial when Trump made his announcement to withdraw from the JCPOA, suggest they may have made the right call—for now.
Europeans, who have far more recent experience of what is happening in Iran than the United States, which has not had an embassy in Tehran for forty years, fear that Trump’s approach is likely to slow rather than increase the pace of reform in Iran. Hardliners, one Iranian friend told me recently, “are doing cartwheels” since they feel their hand has been immeasurably strengthened against pragmatists like President Hassan Rouhani and Foreign Minister Javad Zarif. Iranians may not appreciate the incompetence and corruption of their rulers, but they appreciate even less a hostile outsider like Trump telling them what to think and do.
Yet even those Europeans who want to keep the JCPOA alive and lower tensions in the region are frustrated by how little Iran is giving them to work with. Iran's announcement on June 5 that that it could restart the manufacture of centrifuges if the Europeans are unable to rescue the JCPOA, while understandable, raises the stakes. Moreover, far from beginning to moderate its behavior in the region, which was the hope of those who put their careers on the line to deliver the 2015 deal, Iran has continued to hold dual nationals on bogus spying charges, built up Hezbollah’s military capability in southern Lebanon, supplied growing numbers of missiles for the Houthi rebels in Yemen to fire into Saudi Arabia, and pressed ahead with the development of ballistic missiles capable of inflicting serious damage on its neighbors while calling for the destruction of Israel.
Team Trump, in “told-you-so” mode, does not believe any of this will change until Iran begins to realize that it is not after all the big winner from the recent turbulence in Iraq, Syria, and Yemen, and feels the economic heat from extra sanctions. The trouble is, while the hand of the pragmatists is undoubtedly weakened by Trump’s decision, along with the lot of ordinary citizens, that of the hardliners is strengthened. What is more, these are the very people who profit the most from the black markets and corruption that thrive under sanctions at the expense of the ordinary people whom Trump says he wants to help. Fifty years of US sanctions against Cuba failed for exactly this reason.
Change in Iran, when it comes, will come from within when the regime realizes its survival depends on addressing its incompetence and declining popularity. Trump’s approach means it does not have to.
Peter Westmacott is a distinguished ambassadorial fellow with the Atlantic Council’s Future Europe Initiative. He served as the United Kingdom’s ambassador to the United States from 2012 to 2016.